$1.4B Wendy’s Stock Buy Back

Published: June 3, 2015

$1.4B Wendy’s Stock Buy Back, Wendy’s (NASDAQ: WEN) announced that its Board of Directors has authorized a new $1.4 billion share repurchase program. The Company also updated its 2015 and long-term outlook to reflect the anticipated impact of the repurchase program, its recently completed refinancing and the sale of its bakery operations.

“Our recent operating results, along with the shareholder-value enhancing initiatives and updated outlook announced today demonstrate continued progress with our brand transformation,” President and Chief Executive Officer Emil Brolick said. “The growth reflected in our long-term outlook, especially our expectations for steadily increasing Adjusted EBITDA margins, demonstrates the higher quality of earnings we are generating as a result of our system optimization initiative, which remains on track for completion in 2016. The enhanced earnings stream includes increased royalties and rental income from the 674 properties we own.”

Board authorizes a $1.4 billion share repurchase program; Company to commence $850 million share repurchase program today, June 3

The Company’s Board of Directors authorized a new share repurchase program for up to $1.4 billion of the Company’s common stock (or approximately 30 percent of the Company’s market capitalization as of May 29, 2015) through the end of 2016.

The Company intends to repurchase shares with existing cash on its balance sheet, cash flow from operations, net proceeds of approximately $925 million from its recently completed securitization refinancing, expected pretax proceeds of approximately $400 to $475 million (approximately $350 million after tax) from the third phase of its system optimization initiative and after-tax proceeds of approximately $50 million from the sale of its bakery operations.

As part of the new authorization, the Company will commence an $850 million share repurchase program today, June 3, including a modified “Dutch Auction” tender offer to repurchase up to $639 million of its common stock at a price range between $11.05 and $12.25 per share. The terms and conditions of the tender offer are available in an Offer to Purchase and the related Letter of Transmittal that the Company will file today with the Securities and Exchange Commission.

The tender offer is part of an $850 million stock buyback program, which also includes a separate purchase of up to $211 million of the Company’s common stock from the Company’s largest shareholder, the Trian Group. At the Company’s request, to maximize liquidity for other shareholders, avoid impacting the purchase price received by shareholders participating in the tender offer, and provide certainty regarding Trian’s participation in the stock buyback program, Trian has agreed, under a purchase agreement with the Company, not to tender or sell any of its shares in the tender offer. Under the same agreement, the Company has agreed, following the completion of the tender offer, to purchase from Trian a pro rata amount of its shares (based on the number of shares the Company purchases in the tender offer) at the same price received by shareholders who participate in the tender offer.

The Company expects to use the remaining $550 million of its $1.4 billion share repurchase authorization before the end of 2016, as funds become available from the Company’s system optimization initiative. The Company plans to announce its intentions regarding the timing and mechanism(s) for future share repurchases at a later date.

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